How You Can Be a Smarter Giver This Holiday Season

The holidays often bring charitable giving top-of-mind to many folks who wish to help the less fortunate, give thanks for the abundance in their lives or simply receive a tax break.

Whatever the reason, with millions of Americans still unemployed, thousands trying to rebuild after superstorm Sandy and staggering needs abroad, there is no shortage of worthy causes.

And you don't need to be a millionaire to be charitable.

Here are a few ways to give without breaking the bank—and to make sure your donation ends up in the right hands.

The holidays often bring charitable giving top-of-mind to many folks who wish to help the less fortunate, give thanks for the abundance in their lives, or simply receive a tax break. Veronica Dagher on Lunch Break looks at ways to give (without breaking the bank) and how to ensure your donation ends up in the right hands. Photo: Getty Images.

1. Make it a group effort

ENLARGE

Mick Wiggins

Every month, a client of Cassidy Burns meets eight of her friends for a potluck dinner to discuss topics related to generosity. Over the course of a year, each of the women makes an informal presentation about her favorite charity to the group. They each commit to making a donation that's within their budget as long as their financial situation allows, says Ms. Burns, a financial planner in Minneapolis. In December, the group votes on which charity will receive the members' pooled contributions.

Ms. Burns says giving circles can be as formal or informal as the group decides. It's helpful for the group to agree on guidelines, timing and a process for selecting the organizations it will support, she says.

"They're a great way for people to share their resources, learn more than they would on their own and make a more significant impact," she says.

2. Get your company to help

If you want to give more to your favorite charity but can't afford to, you might turn to your company for help, says Don Nicholson Jr., a financial planner in Wilmington, Del. One of his clients was able to double her $250 donation to $500 thanks to her company's matching program. Companies also may make donations to a charity where an employee volunteers—such as a soup kitchen—even if the employee doesn't make a monetary donation.

Mr. Nicholson says employees should check for any restrictions, such as the maximum the company will match or the types of charities it will support.

3. Give your time

"Organizations need help almost as much as they need money," says Carolyn McClanahan, a Jacksonville, Fla., financial planner. If people don't have time to volunteer now because of the holiday rush, they could let the organization know they intend to volunteer in the new year, she says.

"Making the commitment helps you stick to it," Ms. McClanahan says.

Deciding how much time you can give to the organization can also help staffers there plan appropriately. Volunteering for a cause you are passionate about can help them stay committed, she says.

And, if you have a specific skill or talent, you may wish to consider sharing it with the charity.

For example, a friend of Ms. McClanahan's, who is a hair stylist, gave free haircuts at a homeless shelter.

4. Help start a farm

Donors who wish to help the millions of starving families in especially impoverished areas of the world may consider donating money to buy a share of a cow, chickens, or even bees and honey to help feed a hungry family, or give them a source of income, says Ken Nopar, a philanthropy consultant in Chicago. For example, $10 will buy a share of a sheep at Heifer.org and $18 buys honey bees for rural farmers at Oxfamamericaunwrapped.com.

Letting children decide, say, what farm animal to give can help instill the value of helping others in a fun way, says Mr. Nopar.

5. Give now, grant later

Donor-advised funds are increasingly popular with the charitably minded this year as uncertainty surrounding the tax code looms.

The funds—which can be opened at providers including Fidelity Charitable, Schwab Charitable and elsewhere—enable donors to receive a tax deduction immediately but give them the flexibility to make charitable grants later on.

Five thousand dollars is a typical amount necessary for opening a fund, but some community foundations will open donor-advised funds for as little as $1,000. (See Carolyn T. Geer's "Investing Basics" column for more information about how to set up one of these donor-advised funds.)

With the threat of estate-tax rates rising in 2013, some wealthy individuals may want to use donor-advised funds to get assets out of their estates this year, says Clarissa Hobson, a Colorado Springs, Colo., financial adviser.

Check It Out

No matter what charity folks choose to support or how much they plan to give, it's important to check out the charity before contributing. Websites such as CharityNavigator.org and GuideStar.org can help donors vet a charity and ensure its charitable status.

If donors wish to support an organization they haven't helped before, they may want to start by making a small gift, say, $10, says Dennis McCarthy, vice president of strategy for Blackbaud, a provider of software and services to nonprofits.

If donors don't know the organization that is telefundraising or making door-to-door solicitations, Mr. McCarthy recommends they request written information to review before they give.

For online donations, donors typically need to provide only enough information to process a transaction. Their name, email, address and credit-card information are usually sufficient, he says.

He says donors should watch out for organizations whose names are only slightly different from those of big, well-known charities. Remember that many groups use common words—such as children, cancer or police—in their names.

"If you're not sure if the organization is legitimate," he says, "don't give or [do] check them out."

Online Resources

GuideStar.org: View charity tax returns and learn more about an organization's mission, goals and leaders.

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